Subsequent Events Procedures

The period between the balance sheet date and the date of the auditor report is called the subsequent period. Audit procedures performed in this period are called the subsequent events review. The significance of the audit report date is that it is the cutoff point for an auditor’s responsibility to be informed about events and transactions that occur after the date of the financial statements but that have a material effect on those statements. Required: What are the two types of subsequent events in terms of their effects on the financial statements? Give an example of each type of subsequent events? List the type of procedures performed during a subsequent events review.

Audit Program for Cash including objectives and procedures for a comprehensive audit of cash accounts.

The audit program for cash contains a statement of the audit objectives, the complete and detailed procedures, and a conclusion. It is adapted from PPC, a division of Thompson Publishing.

Auditing

SECTION III: YRS, Incorporated Balance Sheet Year Ended December 31, 2006 Cash 100 Accounts Receivable 200 Total Assets 300 Accounts Payable 150 Capital Stock 100 Total 250 YRS Incorporated Income Statement for the Period ending December 31, 2006 Net Sales 500 Cost of Goods sold 100 Gross Profit 400 SG&A 200 EBIT 200 Income Tax Expense 100 Net Income 100 Based upon the information presented above would the auditor issue a qualified opinion, why? SECTION IV: Write an audit program for accounts receivable. This program must include at least 10 steps.

Auditing: 25 T-F plus an audit program for cash

TRUE OR FALSE 1. The Sarbanes Oxley Act was implemented by Germany in 2002. 2. The evaluation of the internal control environment is the responsibility of management. 3. GAAS refers to General Accounting and Auditing Standards. 4. GAAP refers to Generally Accepted Accounting Practices. 5. Confirmation of customer accounts receivable could be considered an acceptable audit procedure. 6. Materiality should be the same for all audit clients. 7. Management must present to the auditors a calculation of the cost/benefit analysis for internal controls. 8. Developing an audit program is the responsibility of management. 9. Confirmation of accounts payable balances with suppliers is an a... click for more

Auditing Problem - Inventories & Cost of Goods Sold

Ace Corporation does not conduct a complete annual physical count of purchased parts and supplies in its principal warehouse, but uses statistical sampling instead to estimate the year-end inventory. Ace maintains a perpetual inventory record of parts and supplies and believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable so as to make a physical count of each item of inventory unnecessary. a. Identify the audit procedures that should be used by the independent auditor that change or are in addition to normal required audit procedures when a client utilizes statistical sampling to determine inventory value and does not conduct a... click for more